POLL-Food prices likely pushed India’s inflation to a 16-month high in March

Band Arsh Tushar Mogre and Vivek Mishra

BANGALURU, April 11 (Reuters)Retail price inflation in India likely accelerated to a 16-month high of 6.35% in March, well above the Reserve Bank of India’s upper tolerance range for a third consecutive month. , in part due to a sustained rise in food prices, according to a Reuters poll.

The full effect of the surge in crude oil and global energy prices following Russia’s invasion of Ukraine in late February is unlikely to show up in consumer prices until April, as the impact on consumers at fuel pumps has been delayed.

The April 4-8 Reuters poll of 48 economists suggested inflation INCPY=ECI, measured by the consumer price index (CPI), rose to 6.35% in March on an annual basis, compared to 6.07% in February. That would be the highest reading since November 2020.

The forecast for the data, due out on April 12 at around 12:00 GMT, ranged between 6.06% and 6.50%. No one expected it to fall below 6%, the upper end of the RBI’s tolerance band.

“We expect headline inflation to have accelerated to 6.30% year-on-year as food prices edged up sequentially after a three-month decline through February,” said Dhiraj Nim, economist at ANZ, referring to the seasonal pattern of monthly changes in food prices.

Food prices, which account for almost half of the inflation basket, are also expected to remain high as supply chain issues related to the Russian-Ukrainian war disrupt global grain production, oil supplies edibles and fertilizer exports.

Prices for palm oil, the world’s most widely used vegetable oil, have jumped nearly 50% this year. Rising food prices are being felt strongly by millions of people living below the poverty line who have already suffered their jobs and incomes due to the pandemic.

Samiran Chakraborty, chief economist for India at Citi, said higher global commodity prices will show up in March inflation figures, along with edible oils.

“Although there was a delay in the onset of petrol price hikes after the national elections, retail prices still increased by INR 6.5/litre in the last 10 days of March,” Chakraborty said.

Unlike major central banks which are facing inflation rates at multi-decade highs, the RBI has chosen to leave interest rates stable even though inflation has climbed well above its target and is not showing. no sign of slowing down anytime soon.

The RBI again left its key repo rate unchanged at a record high of 4.0% on Friday. But analysts are beginning to worry that the right time to start raising interest rates may have already passed.

“They’re way behind the curve. What the Fed’s actions have shown us is that the moment you learn you’ve been wrong about inflation being transitory, you’re bound to ‘act more aggressively,’ said Kunal Kundu, Indian economist at Societe Generale.

(Reporting by Arsh Mogre and Vivek Mishra; Polling by Swathi Nair and Devayani Sathyan; Editing by Hugh Lawson)

((Vivek.Mishra@thomsonreuters.com; Twitter: https://twitter.com/Reuters_Vivek))

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